New Arron Banks MGA backed by Gibraltar-based insurer

Brexit campaigner Arron Banks’s insurance group has set up a new MGA called Somerset Bridge to diversify the capacity available to its UK broking arm, Eldon.

Eldon revealed the new MGA alongside a steep drop in profit before tax for 2016.

UK-based Eldon traditionally placed a large chunk of its business with Arron Banks owned, Gibraltar-based insurer Southern Rock. Southern Rock receives 85% of its business from Eldon.

Eldon, which trades under the brands GoSkippy, Footprint and Debenhams, and said in its full year 2016 results that Somerset Bridge was set up in October 2016 as part of the group. It added that from June this year, 25% of Eldon’s policies have been underwritten through Somerset Bridge.

The new MGA is backed by Gibraltar-based insurer Watford Insurance Company. Watford Insurance is a subsidiary of Bermuda-based (re)insurer Watford Re, which is in turn backed by global (re)insurer Arch Capital Group.

Companies House lists Arron Banks as a person of significant control of Somerset and says he owns between 25% and 50% of the shares in the new MGA.

Strategy change

News of the new MGA follows a strategy overhaul at Southern Rock, which includes shifting to a more traditional underwriting model and buying more reinsurance.

Southern Rock’s solvency ratio slipped to 103% at the end of 2016, but the company forecasts that it will be 137% by the end of 2017, thanks to its new business plan.

Eldon also announced in its results that it split off its Business Choice Direct unit into its own new legal entity, Business Choice Direct Limited, on 1 November 2016.

Business Choice Direct specialises in commercial motor.

Steep profit drop

Eldon suffered a sharp drop in profit in 2016. It made a profit before tax of £165,000, down from £281,000 in 2015.

This was despite a 39% increase in revenue to £47.3m in 2016 from £33.7m in 2015.